If the government decides to abolish or alter alternatively secured pensions in the pre-Budget Report, pensioners will be left with no choice but annuities past the age of 75, but are these still a viable proposition?
Decumulation options for pensions are slim with a straight choice between drawdown and annuities, but over the last few years annuity prices have steadily increased as the demand for gilts - the long-term government bonds which back annuities - has started to outstrip supply. This means pensioners are paying more today for the same amount of income pensioners were receiving just two years ago, with figures from the Association of British Insurers (ABI) showing the average price of an annuity today is £38,879, while in 2005 it was £27,027 and just £21,479 in 2004. But in addition some part...
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